Australian Competition & Consumer Commission v FFE Building Services Ltd

The issue for determination 6 The proceeding is still at the pre-trial directions stage. ACCC was directed to file and serve statements of evidence of all its proposed witnesses. I understand this has been done. It is accepted by all parties that it would be appropriate for the Court to make a similar direction in respect of the witnesses proposed to be called on behalf of the corporate respondents. However, there is an issue as to whether the Court ought to take this course in relation to the natural person respondents ("the individual respondents"). 7 Counsel for some individual respondents contend that, to do this, would be inconsistent with the entitlement of people in the position of their clients to refuse to provide information that would tend to subject them to a penalty. Counsel say this privilege has been recognised and respected in earlier proceedings brought by ACCC for breaches of the Act. 8 Counsel for ACCC accept that the individual respondents have a right to remain silent, even though the proceeding is a civil action, not a prosecution for a criminal offence. They therefore agree these respondents should not be compelled to provide information. But, they say, the proposed direction to provide statements of intended witnesses would not transgress the relevant principle; whether or not they choose to give evidence is a matter for the respondents (and them alone) to determine. The only effect of a direction to provide statements, according to counsel for ACCC, is that ACCC would have advance notice of the evidence likely to be given on behalf of these respondents. ACCC would be able to determine in advance whether it would need to call evidence in reply and, if so, ensure that this evidence was available in a timely way at the trial. There would be no disruption to the trial, whereas this might occur if ACCC only learns of the evidence during the course of trial. 9 During argument, counsel on each side of the dispute accepted some constraints on their clients' positions. Counsel for ACCC offered an undertaking that, if statements were provided, they would not be tendered in the applicant's case in chief or used to support an argument that a particular individual respondent had a case to answer. Counsel for the individual respondents, on the other hand, each offered to consent to a direction that their client provide statements of evidence within a specified short period - they suggested 48 hours - after closure of the applicant's case against their client.

The authorities 10 Counsel for the individual respondents argued the relevance of a principle applied by the High Court of Australia in Pyneboard Proprietary Limited v Trade Practices Commission (1983) 152 CLR 328. That case concerned notices under s 155 of the Act requiring recipients to furnish to the Commission specified information, to produce specified documents or to appear before the Commission to give evidence and produce documents. At 337 the majority of the Court (Mason ACJ, Wilson and Dawson JJ) said: "… the construction of s. 155 is to be approached on the footing that the privilege of refusing to answer questions or provide information on the ground that the answers or the information might tend to expose the party to the imposition of a civil penalty is (a) not confined in its application to discovery and interrogatories; (b) available at common law as well as in equity; and (c) distinct from, though often associated in discussion with, the privilege against exposure to conviction for a crime." 11 This same principle was later applied in the High Court in Reid v Howard (1995) 184 CLR 1. The appellant was a chartered accountant who had confessed in general terms to misappropriating clients' money. He had not yet been charged with an offence. Former clients obtained from a judge an order to account. The Court of Appeal of New South Wales substituted a more limited order, but this still required the provision of information about his dealings. The High Court set aside even this order on the basis that it offended the privilege against self-incrimination. In a joint judgment at 12, Toohey, Gaudron, McHugh and Gummow JJ said the principle "operates so that a person cannot be compelled 'to answer any question, or to produce any document or thing, if to do so may tend to bring him into the peril and possibility of being convicted as a criminal'." 12 This principle has been applied in this Court to proceedings for a penalty, even though they involved no peril or possibility of conviction as a criminal. The earliest relevant discussion seems to have occurred in Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Live-Stock Corporation (1979) 42 FLR 204. That was an action seeking injunctive relief and damages against both corporate and natural respondents. The action alleged contravention of provisions contained in Part IV of the Act, but it did not seek imposition of pecuniary penalties. However, counsel for the respondents argued their clients should be excused from discovery and production of documents, and answering interrogatories, on the basis that the action sought to establish conduct on their part that would make them liable to the imposition of a penalty pursuant to s 76 of the Act in a subsequent proceeding. 13 Deane J said, at 207-208: "It is a well-established principle that a defendant in proceedings which are solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents which may assist in establishing his liability to the penalty … Even where, as in the present case, the proceedings are not for recovery of a penalty but to prevent and redress civil injury, a party to litigation ought not to be compelled to provide information or produce documents for inspection by the other party if the result thereof will be to provide evidence against him which may be used to establish his liability to a penalty in other proceedings … In the former case, that is to say in a mere action for a penalty, a court should, in the absence of statutory provision to the contrary, refuse to make any order at all against the defendant for discovery or production of documents or provision of information for the reason that the whole and avowed object of the proceedings being the imposition and the recovery of a penalty, an order for the production of documents or provision of information against the defendant can, so far as the prosecutor of the action is concerned, properly have no other intended consequence … This is a broad and unqualified rule whose origins are apparently to be found in a reluctance on the part of the Court of Chancery to lend the aid of its discovery proceedings to the common informer …" (Citations omitted) 14 Australian Competition and Consumer Commission v Pioneer Concrete (Qld) Pty Limited (unreported, 15 December 1995) was a proceeding for a penalty under s 76 of the Act. Nonetheless, Drummond J ordered the pre-trial exchange of statements of evidence. It seems the main issue before his Honour was the desirability or otherwise of using written statements, rather than oral evidence, as a means of communicating the witnesses' evidence in chief. However, Drummond J was cognisant of the point under present consideration. He quoted from an unreported decision of this Court, Trade Practices Commission v Tepeda Pty Limited (11 December 1992), in which Morling J said: "In the first place, Mr Bannon (i.e., counsel for the Commission) has undertaken that he will not tender the affidavits against the respondents (who comprised one corporate respondent and one natural person respondent) should they decide not to go into evidence. It seems to me that if there were any prejudice, that largely dissipates that. More importantly, I think the orderly conduct of these proceedings (which are not criminal but are civil proceedings for the recovery of penalty) can only be achieved if the respondents file affidavits denying the allegations of fact contained in the applicant's affidavits. If it were otherwise, the applicant would be taken by surprise and this could lead to an adjournment of the proceedings. I think most judges would give an applicant a reasonable opportunity of answering a respondent's case when it (ie the applicant) has put its case in writing well before the hearing, and the other side has not done so." 15 Drummond J said that, given that a penalty is sought, "it is inappropriate that any respondent should be deprived of the opportunity to put a 'no case' submission at the close of the applicant's case by being required to expose before trial its own evidence in full, without any restraint on the use the applicant may make at trial of that respondent's evidence". 16 In the event, Drummond J made orders for the use of statements (with presently immaterial exceptions) but on the basis of an undertaking by the applicant "with respect to each respondent not to make any use of that respondent's evidence in dealing with any 'no case' submission that that respondent may make at the close of the applicant's case against it or him and which the Court in its discretion is prepared to entertain …[and] not to make any use of that respondent's affidavits of evidence in the applicant's case against the respondent, if that respondent does not go into evidence". 17 In Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (1997) 77 FCR 217, Heerey J applied Refrigerated Express in relation to an issue about filing and serving witness statements. The proceeding was one for recovery of pecuniary penalties. After referring to all the above-mentioned authorities, his Honour said (at 220): "… no distinction can be drawn on the basis that the present case is concerned with the privilege against exposure to a penalty rather than the privilege against incrimination. It would be contrary to the strong statements in Reid to make (over the objection of the second to sixth respondents) any order for the production of witness statements. Clearly, as noted, such statements would be analogous to answers to interrogatories or the production of documents on discovery. This position is not altered by the fact that the respondents have already filed a defence. Counsel for the applicant, correctly in my view, did not argue that there had thereby been a general waiver of the right to take advantage of the privilege." 18 The issue received more elaborate consideration in Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [1999] FCA 672, 163 ALR 465. After referring to all the above authorities, Sackville J said (at para 16) there is "no reason to think that the scope of the privilege against exposure to a penalty is any narrower than that of the privilege against self-incrimination". That view has not been challenged before me. 19 However, counsel for ACCC before me did challenge Sackville J's subsequent remarks, at paras 17-19. His Honour there said: "The orders sought by the ACCC would require the individual respondents to file their statements of evidence in advance of the trial on pain of foregoing the opportunity of giving evidence at the trial and of placing themselves at risk that the Court would draw adverse inferences against them. Moreover, at least in this case, they would run the risk that their statements of evidence would provide the ACCC with 'leads' that would result in other evidence adverse to them being adduced in the very proceedings in which penalties are sought. The latter point can be illustrated by reference to the fifth respondent (Mr Roach). The ACCC alleges that Mr Roach knew that Amcor and Visy desired to achieve certain objectives that were consistent with a contravention of s 45(2) of the TP Act. The ACCC, as its statement of claim makes clear, intends to invite the Court to draw inferences adverse to Mr Roach from certain events and circumstances, such as the role performed by him as State Sales Manager of Amcor. What if Mr Roach files a statement explaining his duties in detail, in order to rebut the inference that he knew of the alleged aspirations of Amcor and Visy? In these circumstances, would there not be a "real and appreciable danger" that the proffered explanation will provide or lead to other evidence upon which the ACCC might wish to rely in the proceedings against him … ? Mr Kerr did not dispute that this was so and, indeed, confirmed that the point of the orders sought by the ACCC was to secure to it a forensic advantage in the proceedings. In my opinion, if the orders sought by the ACCC were made, the 'election' facing the individual respondents would neither be unconstrained nor free. The individual respondents would not be compelled by an order of the Court to make statements or provide information that would expose them to a penalty. In this sense, the case is different from an order requiring the production of documents or the filing of an affidavit disclosing specific information. But if they wished to avoid adverse forensic consequences in the penalty proceedings, they would have little choice but to file statements of evidence. By taking that course they would expose themselves, to the risk that their own words would materially assist the ACCC to make out the case against them. To require the individual respondents to make this invidious choice is not, in my opinion, consistent with the rationale underlying the privilege against exposure to penalties. This is sufficient to warrant dismissal of the ACCC's motion." (Original emphasis) 20 The view of Sackville J has been adopted, at first instance, in several actions for pecuniary penalties arising out of the Corporations Act: see Australian Securities and Investment Commission v ABC Fund Managers Limited [2001] VSC 92 (Warren J); Australian Securities and Investments Commission v Plymin [2002] VSC 56 (Mandie J) and Australian Securities and Investments Commission v Whitlam [2002] NSWSC 591; 42 ACSR 407 (Gzell J). However, the correctness of that course has been thrown into doubt by a recent decision of the Victorian Court of Appeal, Sidebottom v Commissioner of Taxation [2003] VSCA 2. 21 Sidebottom was a proceeding for pecuniary penalties under the Excise Act 1901. That Act proclaimed the relevant conduct to be an "offence" and it spoke of "excise prosecutions". Nonetheless, the Court of Appeal upheld a judge's order requiring the pre-trial filing and service of witness statements, even by the non-corporate defendants. 22 The principal judgment was that of Phillips JA. Batt JA and O'Bryan AJA agreed with him. 23 At para 10 Phillips JA said that "whatever may have been said of proceedings to recover penalties in other contexts, in this case the relevant wording of the statute does appear to bespeak criminality". At para 11, he went on: "Obviously enough the proceeding which was commenced in this instance was instituted in order to establish the defendants' guilt of the offences alleged and for the recovery of pecuniary penalties as a result, although equally obviously the proceeding itself is civil in form as expressly authorised (if not indeed directed for all practical purposes) by s.136 of the Excise Act. So much is not in dispute and in the end whether it is correct to characterise the proceeding, once instituted, as itself a 'criminal proceeding' despite its form or because of its form as no more than a 'proceeding of a penal nature' does not seem to me to matter. Like proceedings for offences and penalties under the Income Tax and Social Services Assessment Act 1936-1951 were described as 'of a penal nature' in Naismith v. McGovern (1953) 90 CLR 336." 24 Phillips JA said that, in Naismith, "the Court appeared to recognise" what counsel had called "the privilege against self-incrimination or … against exposure to penalty". Phillips JA noted that, in that case, the argument concerned discovery of documents. At paras 16-18 he said: "The first difficulty is to establish the principle relied upon. Mr. Walters, in a carefully constructed argument, contended that, whether or not it had ever been so, it was not nowadays the case, even when a person was on trial before a jury, that the accused was entitled to remain altogether silent as to the defence case until the close of the Crown case. Some statement of the defence was commonly required once the trial had been opened and, of course, there were specific matters, such as alibi, of which even more notice was required. Mr. Woinarski's answer was that these were but particular exceptions by statute to a general rule permitting the accused to stay silent until all evidence against him or her had been put before the Court, and perhaps that is so. But there is still difficulty for the appellants in that these excise prosecutions are not being prosecuted as a criminal trial because s.136 provides to the contrary and the question must therefore be how far, if at all, the prescription made by s.136 admits of the principle upon which the appellants seek to rely, a principle drawn from the conduct of criminal trials properly so-called (whether or not prosecuted summarily). … On the face of it, s.136 permits the commencement of these excise prosecutions by writ on the civil side and at least authorises their prosecution accordingly. The ordering of witness statements before trial is nowadays a common enough part of the 'usual practice and procedure in civil cases', although it remains a matter of discretion in most cases. Here, it was a matter of discretion … and the judge considered that there were good grounds for exercising the discretion against the defendants. He thought it appropriate to order the defendants to deliver witness statements before trial if only to identify from among the great mass of detail relied upon by the plaintiff what facts were in dispute and what were not. Ordinarily such an exercise of discretion in a matter of practice or procedure could not be overturned on appeal." 25 At paras 19 to 21 Phillips JA noted most of the authorities mentioned above. He particularly commented on Refrigerated Express, remarking that "Deane J was disposing of a case involving discovery and interrogatories and as I read the reasons for judgment his Honour was relying upon, but not extending, the principle that in proceedings to recover penalties discovery and interrogatories will not be ordered". 26 Phillips JA rejected the view expressed by Sackville J in Amcor. He said (at para 23) that the "adverse forensic consequences", and corresponding "forensic advantage", noted by Sackville J "are merely the result of any defendant's choosing to give evidence". Phillips JA went on: "There is a question of timing, of course (that is to say, whether the defendant should be freed of the need to disclose the evidence before the commencement of the trial, or more particularly before the close of the plaintiff's case) but the exposure to penalty, if such it be, comes about by the giving of the evidence, not the timing of its disclosure. Further, I agree with counsel's submission in Amcor that, because there is lacking the coercion involved in discovery and interrogatories, the cases in which such orders are refused on the ground that the proceeding is brought to recover penalties are simply not relevant when the order sought is for no more than the delivery of witness statements before trial." 27 His Honour held that "both McPhee and Amcor should be distinguished or, if they cannot be distinguished, not followed in this instance". 28 Phillips JA concluded: "In conclusion, it seems to me that the reasons given by his Honour to justify the exercise of discretion necessary to support the ordering of witness statements in this instance were sufficient. Despite the reference to these not being 'criminal proceedings' and there being 'no question of self-incrimination arising in the case', I am not persuaded of material error below. Importantly, the ordering of witness statements does not involve compulsion: no one is compelled to put forward witness statements if he or she chooses not to go into evidence, with the result that the privilege against exposure to penalty is not at issue. The appellants are required to file and serve witness statements only if they choose to give or adduce evidence and then only in respect of evidence that they choose to lead. The order is concerned rather with the timing of the disclosure of that evidence than with its provision. Cases on the making of orders for discovery or the administering of interrogatories are not to the point: it seems to be well established that in a proceeding such as the present, in which the plaintiff is seeking to establish guilt of offences and to recover penalties by way of punishment, orders will not be made for discovery or interrogatories because of the nature of the proceeding itself and without the need for any further or specific proof of prejudice. It is a different matter when an order is sought for delivery of witness statements before trial and, despite the appellants' submission to the contrary, I see real no support for the proposition that defendants in an excise prosecution for the recovery of penalties are entitled to resist such an order on the ground that they cannot be compelled, as a matter of principle, to disclose their evidence before trial, or indeed before the plaintiff's case has been closed - at least in this instance where pleadings have closed, further and better particulars have been provided and the plaintiff's witness statements were delivered to all defendants some time ago."

Conclusions 29 A first instance judge confronted with conflicting relevant authorities is often in a difficult situation, especially (as here) where the conflicting views have been expressed in carefully reasoned judgments that take into account all the earlier decisions on the point. 30 Candour compels me to say that I prefer the view of Phillips JA in Sidebottom to that expressed by Sackville J in Amcor. Like Phillips JA, I think there is a fundamental distinction between a situation in which a person is required to produce documents and provide information (as by requiring discovery and production of documents, the answering of interrogatories or compliance with a notice under s 155 of the Act) and a situation in which the person is left entitled to remain silent and unco-operative but is directed that, if he or she wishes to provide information, this must be done in a particular way or by a particular date. The former requirement destroys the right of silence, the latter requirement merely regulates the manner of breaking the silence that the person has the option to maintain. 31 Like Phillips JA, I have difficulty with Sackville J's references to "adverse forensic consequences", if statements are provided in advance of the trial. Ordinarily, the statements would not be required to be provided until after the applicant had filed and served all its statements of evidence and completed its discovery of documents. The applicant's cards would all be on the table. It would not be proper for the applicant to use the respondents' witness statements as a source of new "leads" giving rise to further evidence in chief. The only proper use of the witness statements would be to enable the applicant to consider whether it was necessary for it to adduce evidence in reply and, if so, prepare the necessary statements of evidence or obtain the necessary documents. It may confidently be assumed that any judge of this Court would be astute, if necessary, to enforce these limitations. 32 It is not entirely clear to me what Sackville J meant, in para 19 of his reasons, when he said that, if the respondents "wished to avoid adverse consequences in the penalty proceedings, they would have little choice but to file statements of evidence". He may have thought that, having regard to the nature of the proceeding, it would be unwise for the respondents to decide not to go into evidence, perhaps particularly because this might fortify an adverse inference: see Jones v Dunkel (1959) 101 CLR 298. However, to the extent that this is an accurate assessment of the position in a particular case, it means only that it might be a bad tactical decision for the respondent to maintain his or her right of silence. The avoidance of "adverse forensic consequences" is a function of the decision to give evidence, not of the fact that notice of that evidence is required to be provided in advance of the trial. 33 The offer of counsel for the individual respondents to provide written statements of evidence within a specified short period after the closing of the applicant's case is consistent only with their view that a requirement for provision of statements is not, in itself, a derogation from their clients' rights. The argument is only about timing. Essentially, it seems to be based on mistrust of ACCC (in relation to the use that would be made of the statements) and the Court (in relation to enforcement of the relevant limitations on that use). 34 However, having said all this, I have come to the conclusion that I should follow the decisions in McPhee and Amcor. They are considered decisions of two experienced judges of this Court concerning the very issue I have to determine. Both decisions were given in relation to penalty proceedings under s 77 of the Act. Although I find the reasoning of Phillips JA in Sidebottom attractive, and it was expressed in a matter arising under federal jurisdiction, I think it is important for there to be a consistency of approach within this Court in relation to matters of practice and procedure. It is undesirable that the course required to be followed in preparation for trial of a matter should vary, in any significant way, as between one judge and another. 35 In expressing the above view, I have not overlooked the fact that Drummond J was prepared to require non-corporate respondents to provide their witness statements before trial, and that he drew upon a decision of Morling J in taking that course. However, it does not appear that the argument in either of those cases focussed on the issue which arises in this case. The present issue was only peripheral to the main question in each of those cases: whether to use witness statements at all. The present issue having been exposed, and carefully considered, in McPhee and Amcor, I think it is preferable for a single judge of the Court to follow those decisions. If that result is undesirable, the situation may be corrected by a Full Court. 36 For the above reasons, I propose not to direct the service, at this stage, of statements of the evidence proposed to be led on behalf of the individual respondents. I will make such a direction in relation to the corporate respondents. And the parties should conduct themselves upon the assumption that, at trial, I will make a direction for the provision of witness statements of the individual respondents within a very short period (possibly as short as 24 hours) after closure of the applicant's case. 37 Costs involved in determination of pre-trial directions are usually treated as costs in the action. I see no reason to decree otherwise in relation to the issue discussed in these reasons. It was one necessary to resolve as part of preparation for the trial. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Counsel for the Applicant: Mr N Williams SC and Mr D Godwin Solicitor for the Applicant: Australian Government Solicitor

Counsel for the First Respondent: Mr W G Muddle Solicitor for the First Respondent: Deacons

Counsel for the Fifth Respondent: Mr J Thompson Solicitor for the Fifth Respondent: Atkinson & Vinden

Counsel for the Seventh Respondent: Mr D Stack Solicitor for the Seventh Respondent: Carbon Legal

Counsel for the Eighth Respondent: Mr P Tomasetti Solicitor for the Eighth Respondent: Storey & Gough

Date of Hearing: 28 February 2003